Oil and gas severance proposal clears the House

Legislation to increase Ohio’s oil and gas severance tax cleared the House this week after squeaking through the House Ways and Means Committee with a vote of 11-10. For details on the proposal, please read the May 9, 2014 edition of the Ohio Statehouse Update.

Democrats in opposition to the bill argued that the rate was too low, and did not support the increased revenue being used to fund an income tax reduction. Multiple amendments were offered and subsequently tabled that would have instead used the revenue to increase the Local Government Fund, decrease the state sales tax, and create an Alternative Energy grant program.

The bill was amended in committee to create a nonrefundable credit against the severance tax equal to the amount a severer pays in commercial activity tax.

Representative Brian Hill (R-Zanesville) offered an amendment on the House floor to increase the disbursement to local areas impacted by drilling to 17.5 percent. One of two legislators on the Ways and Means Committee from eastern Ohio, Hill voted no in committee, expressing disappointment that the local share was not increased to a greater degree. Acknowledging his hope that the Senate would consider an additional increase for locals, he was a yes during the floor vote.

Governor Kasich continues to advocate for a higher tax rate, saying his proposal to increase the rate to 2.75 percent would keep Ohio competitive with other states that have oil and gas activity. The bill now moves to the Senate for consideration. It remains unclear whether the Chamber will take the measure up for consideration prior to summer recess. The Senate Ways and Means Committee, the likely committee for consideration of this legislation, is not scheduled to meet next week.

Bill to reform insurance industry regulations clears Senate

The Ohio Senate this week approved Senate Bill 140, referred to as the Insurance Regulatory Modernization Act, which updates the state’s regulatory insurance laws. According to the bill sponsor, Senator Kevin Bacon (R-Columbus), the lengthy bill would give insurance companies greater flexibility when it comes to managing their surplus, while at the same time increasing the transparency of the investment process.

Current law requires Ohio insurance companies to operate under a defined limits approach with regard to investments, whereby companies are restricted to the categories they may invest and the amounts that may be invested inside of each category. The bill retains this method, but offers a new defined standards approach for companies that have demonstrated success in safely administering their investment portfolios. This new approach would allow a company to invest assets equivalent to their policyholder liabilities plus a multiple of the company’s authorized control level. Insurers with assets above this threshold will be permitted greater flexibility in their investment strategy upon approval by the Superintendent of Insurance.

Michael Farley, assistant director for legislative affairs at the Ohio Department of Insurance, testified in support of the proposal, saying that increased investment returns will result in more stable premiums to consumers as well as increased availability of products.

S.B. 140 would also make changes to the Insurance Holding Company laws in order to more closely align Ohio with the National Association of Insurance Commissioners’ (NAIC) model act. The proposed changes would give the Department of Insurance greater authority to review various financial transactions and other enterprise risks in which insurance companies and their affiliates engage that could affect the solvency of the insurance company.

The legislation allows for electronic delivery of documents from insurance companies to consumers. With the exception of notices of cancellation, nonrenewal, or termination, the bill authorizes an insurer to deliver information via a secure website if the insurer sends an electronic notice to a contact point, (an email address, instant message, or wireless telephone) and the notice includes a hyperlink to the secure website.

The bill is scheduled for its first hearing in the House Insurance Committee on May 20 and is marked for a possible vote.

Legislation to watch

Avon Lake judgeship: Sponsored by Senator Gayle Manning (R-North Ridgeville), Senate Bill 336 proposes to convert the part-time judgeship of the Avon Lake Municipal Court into a full-time judgeship. The bill was introduced on May 12.

Tip pools: Sponsored by Representative Nickie Antonio (D-Lakewood), House Bill 534 would prohibit an employer from requiring its employees to participate in a tip pool. The bill was introduced on May 14.

BWC claims: Sponsored by Representative Michael Henne (R-Clayton), House Bill 539 would defer the charging of workers' compensation claims to an employer's experience when a third party may be liable for the claim. The bill was introduced on May 15.

MBR higher education: Sponsored by Representatives Cliff Rosenberger (R-Clarksville) and Tim Brown (R-Bowling Green), House Bill 484 is the higher education portion of the governor’s Mid-Biennium Review legislation. Among the provisions included in the bill, it authorizes community colleges to create a tuition guarantee program, where schools establish a tuition cost for incoming freshmen with the promise that the costs will not increase over the course of the student’s time at the college. Additionally, the bill includes new performance-based funding formulas for both Ohio Community Colleges and Ohio Technical Centers that are based on student outcomes and attainment amongst other financial aid programs. The bill passed the Senate on May 14.

Annexation: Sponsored by Representative Peter Stautberg (R-Cincinnati), House Bill 277 requires that the state or a political subdivision real estate owner be included in determining the number of owners needed to sign a petition for an expedited type-II annexation, unless the real estate is a road or road right-of-way. The bill was approved by the House on May 14.

Physician assistants: Sponsored by Representative Anne Gonzales (R-Westerville), House Bill 412 would change the “certificate to practice” issued to physician assistants by the State Medical Board to a “license.” Further, the bill would eliminate the requirement that a physician assistant practicing outside a healthcare facility practice under a physician supervisory plan approved by the board. The bill was approved by the House on May 14.

Salvage vehicles: Sponsored by Representatives Barbara Sears (R-Sylvania) and Ross McGregor (R-Springfield), House Bill 468 makes several changes to Ohio’s Motor Vehicle Salvage Law—a salvaged motor vehicle means any vehicle that is wrecked or dismantled. The bill would expand the types of licenses under which an individual can sell salvage motor vehicles. Under the bill, a person may sell salvage motor vehicles without a license if the transaction is incidental to the person’s primary business. The bill passed the House on May 14.

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